The Keynesian defense of breaking windows or the economic virtues of hurricanes would go something like this:

Yes, breaking windows is destructive. Yes, it reduces wealth. But when there are large amounts of unemployed resources, say in the glass business, then breaking windows is close to a free lunch. In a world of unemployed glaziers, breaking windows can jump-start the economy by putting the unemployed back to work. They will spend the money they receive for repairing the broken windows.

When confronted with the claim by those of us who like Bastiat, that the money to repair the windows will now be unavailable to spend on something else, the Keynesian responds like this:

But people are sitting on money that is doing nothing. The insurance company that will now pay back the homeowner whose house was damaged by the hurricane was sitting on piles of cash. That cash was sitting in the bank where the bank has excess reserves not being lent out, not being invested. So yes, breaking windows can improve the incomes of glaziers and start a process of recovery.

What do we respond, those of us who are enamored with Bastiat and who think he’s right?

I would re-state the Bastiat story and tell it a little differently than it is usually told. The usual point is that the money has to come from somewhere–we see the repaired window but ignore the things that don’t get built or bought. But I think a better way to tell the story is to point out that the RESOURCES have to come from somewhere. The hurricane increases the demand for glaziers and that is good for glaziers. But that is good for all glaziers, employed and unemployed. It pushes up the price of glass repair. That discourages some folks from having glass work done who otherwise would have done it. So there is some offset of the hurricane’s impact on glazier employment. And as the Hayek character says in “Fight of the Century“:

You see slack in some sectors as a “general glut”
But some sectors are healthy, only some in a rut
So spending’s not free – that’s the heart of the matter
Too much is wasted as cronies get fatter.

So while glaziers (and carpenters) may be unemployed, other sectors (such as the wood market) may not be having such problems. The hurricane has a big impact on the price of wood, discouraging a bunch of would-be demanders of wood from buying as much as they did before. Again, there’s an offset. The point is that “aggregate demand” doesn’t tell the whole story.

But the real problem with breaking windows is that it’s not productive. I know. That’s obvious. But think about what the words mean. Right now, there are a lot of unemployed construction workers. What does a hurricane do? A hurricane IS good for carpenters and glaziers and roofers. But it’s unproductive work. It gets the home owner back to the status quo. It doesn’t create anything new or valuable. I’m not saying the production is wasted. I’m saying it’s a repair. Why is that important?

Imagine a world where there hasn’t been a hurricane and I want to help the unemployed carpenter. Here are two ways to do so. One is to burn my house down and then call the carpenter and give him $100,000 to rebuild my house. Here is the second way. I call the carpenter and say, I feel bad that politicians artificially increased the demand for housing at the end of the 20th century, pulling you into an industry that cannot be sustained at its current leve. I feel bad that you’ve been unemployed for three years. So I’m going to give you $100,000.

Which of those two policies would have the bigger stimulative effect? The charity should have a bigger effect. No offsets from pushing up the price of lumber and so on. But giving people money doesn’t change the underlying problem that there are more carpenters than work available for them. Creating temporary work either by burning down houses deliberatively or accidentally through a hurricane doesn’t change the fact that there are too many carpenters and glaziers relative to demand.

So the hurricane will put carpenters back to work. But it would be even better if there had been no hurricane and people had just given them a check. Charity is more productive than destroying stuff and paying people to get back to square one.

But the charity approach is what we’ve been doing for the last few years. It’s called unemployment insurance. I know, it’s supposed to be stimulative but there’s no sign that it is. Why would it be? It doesn’t solve the problem that there are too many carpenters.

This is related what Arnold Kling calls “Patterns of Sustainable Specialization and Trade.” Repairing houses damaged by a hurricane isn’t sustainable. And if I just give carpenters money because I feel sorry for them, that isn’t trade. That’s charity. Both have the same stimulative effect–very little, because they don’t get at the underlying problem. Prosperity is the way we specialize and serve each other, creating products and services that we each value. Destruction cannot be the source of prosperity.

The latest EconTalk is a back-to-school special–Eric Hanushek talking about the importance of teachers. Very provocative. Education would be much more effective in the full sense of the word if we let competition transform it.

Susan Hockfield has a piece in the New York Times on manufacturing. She is probably a very smart person. She is described as a neuroscientist, president of MIT, and a member of the GE board. Here is how her piece opens:

The United States became the world’s largest economy because we invented products and then made them with new processes. With design and fabrication side by side, insights from the factory floor flowed back to the drawing board. Today, our most important task is to restart this virtuous cycle of invention and manufacturing.

Rebuilding our manufacturing capacity requires the demolition of the idea that the United States can thrive on its service sector alone. We need to create at least 20 million jobs in the next decade to offset the effects of the recession and to address our $500 billion trade deficit in manufactured goods. These problems are related, given that the service sector accounts for only 20 percent of world trade.

The piece goes on to talk about why we need government to get involved. But let’s just look at the opening. I disagree with almost every sentence. But the most important error is the idea implicit in this piece that there was a decision made somewhere by someone to gamble on a service economy instead of a manufacturing economy. If the idea of returning to what allegedly made America great is such a good idea, why does she need to write a piece in the New York Times? If making the stuff we invent is so virtuous, why isn’t it happening? There are four possibilities.

1. No one has thought of it.
2. People have thought of it but something stops them from implementing the idea.
3. People have thought of it but the gains go to others so no one does it.
4. It’s not a good idea.

So why does Apple, for example, outsource so much of its production? Because it’s cheaper and it allows more people to be able to afford more Apple products.

Making stuff the cheapest way is the road to prosperity.

Trying to find expensive ways to make stuff (because it once was a good idea but no longer is) is the road to poverty.

… is from page 21 of Hayek’s The Trend of Economic Thinking (Vol. 3 of Hayek’sCollected Works); the quotation comes from the 1933 essay after which this volume is named; in the following passage Hayek is discussing the negative reaction by many people in the 19th century to economics:

The attack on economics sprang rather from a dislike of the application of scientific methods to the investigation of social problems. The existence of a body of reasoning which prevented people from following their first impulsive reactions, and which compelled them to balance indirect effects, which could be seen only by exercising the intellect, against intense feeling caused by the direct observation of concrete suffering, then as now, occasioned intense resentment.

No small part of Keynes’s (and the Keynesians’s) success is due, I believe, to their dressing up in scientific jargon and garb what are, at bottom, little more thanad hoc excuses for people to follow “their first impulsive reactions.” Keynesians’s pose as scientists – their substitution of scientism for science – masks their rejection of a genuinely scientific approach to the study of the economy.

Chief Justice Robert French said the court ordered Mr Bowen and his department be restrained from sending asylum-seekers to Malaysia.

“The declaration made ... was made without power and is invalid,” Justice French said…

If the government now abandons the plan, it will still be bound under the deal to accept 4000 extra refugees from Malaysia, while being unable to send 800 asylum-seekers there for processing.

Let’s review. Julia Gillard first proposed an East Timor detention centre without checking if East Timor would agree. It didn’t.

Then she signed a swap deal with Malaysia that presumed it would be able to send back 800 of our boat people. It can’t.

A new leader by September’s end.

UPDATE

What makes this so particularly humiliating for the Government is that the reason the deal has been overturned is because the Government did what it swore it wouldn’t - it made a deal to send boat people to a country that has not signed the Refugee Convention:

The full bench found the minister could not validly process asylum-seekers in a third country unless that country was bound under law to provide effective protection for them while their refugee status was determined.

The court found processing countries must also provide asylum-seekers with “effective procedures for assessing their need for protection”, and provide protection for certified refugees pending their resettlement or return to their home countries.

“On the facts which the parties had agreed, the court held that Malaysia is not legally bound to provide the access and protections the Migration Act requires for a valid declaration,” the court said in a statement.

“Malaysia is not a party to the Refugees Convention or its protocol. The arrangement which the minister signed with the Malaysian Minister for Home Affairs on 25 July, 2011 said expressly that it was not legally binding...”

The High court has demonstrated that from the beginning this prematurely-announced policy was without legal foundation. Australia had no grounds to send boatpeople to Malaysia without processing in Australia, no grounds to send children, and the agreement with Malaysia announced on July 25 was “not legally binding”.

UPDATE

Meanwhile, how to empty the camps of the more than 6000 boat people lured here?

Early last year the Rudd government was warned its refugee success rate was “out of whack” with other countries and was acting as a “major pull factor”.

(UPDATE: Bowen says there are now 4000 people in detention. No wonder.)

UPDATE

Bowen admits it is a “blow”. He expects people smugglers to “capitalise” on the decision. He is inclined to honor the agreement with Malaysia to take in 4000 of their refugees. He is asked if he intends to offer his resignation. He would not rule out sending boat people to Nauru instead - the very solution this Government foolishly scrapped three years ago, and pigheadly refused to reconsider even when the boats started arriving again..

Senator Brown’s motion on Thursday went unnoticed amid the furore over allegations against the Labor backbencher Craig Thomson, but a decision will now be made against the backdrop of a bitter dispute between the Prime Minister, Julia Gillard, and News Ltd over false claims in a column published in The Australian newspaper on Monday.

Senator Brown and the Communications Minister, Stephen Conroy, have been negotiating terms of reference for an inquiry but cabinet has not made a decision.

Some Labor sources said an investigation was likely but others said there were still strong reservations within cabinet and backed broadening an existing ‘’convergence review’’ into media regulation instead.

Yesterday Ms Gillard attacked The Australian for printing assertions without checking or seeking comment in a column by Glenn Milne. The paper issued a correction and apologised.

I think we can safely conclude that if the Government holds that inquiry, it will be punish and intimidate a news organisation for not being kinder to Labor. And what more leverage would a Prime Minister then have to keep news from you?

THE AUSTRALIAN published today an opinion piece by Glenn Milne which includes assertions about the conduct of the Prime Minister.

The Australian acknowledges these assertions are untrue. The Australian also acknowledges no attempt was made by anyone employed by, or associated with, The Australian to contact the Prime Minister in relation to this matter.

The Australian unreservedly apologises to the Prime Minister and to its readers for the publication of these claims.

I think it went too far. And it’s interesting to see these exchanges now:

Ms Gillard said the publication of the article meant there was a “question of ethics and standards here”.

“If you are going to make an allegation or assertion about someone, then you’ve got to give them the opportunity to comment on it. Basic standards—they should be adhered to.”

Mr Hartigan said Ms Gillard’s further complaints yesterday were “pedantic”.

“While The Australian acknowledged no attempt was made to contact the Prime Minister’s office, comment is rarely if ever sought in relation to opinion pieces,” he said.

“This is a widely understood and accepted practice in journalism. All of the company’s journalists abide by a code of conduct which is enforced strenuously by editors.”

Andrew Bolt – Wednesday, August 31, 11 (05:39 am)

ARE you prepared to sacrifice every element of lifestyle to satisfy the efficient operation of an economy? So yes, the big miners really are pulling the cards at the moment but they don’t offer people a nice town to live in. They can’t offer them even a cool breeze on a hot day. You know it’s a dreadful dirty job in the middle of nowhere, far from anywhere where children should even be brought up. I mean, it’s a pretty antisocial kind of life.

Sean Aylmer, Business Review Weekly editor in chief: That’s what you say but everyone has a choice.

Andrew Bolt – Wednesday, August 31, 11 (05:31 am)

The Prime Minister overstepped the line when she called the chairman and CEO of News Limited, John Hartigan.

Calls that look like an attempt at censorship have many sinister overtones, with threats of inquiries and forced sales left hanging in the air.

And I ask her: What are you so afraid of? What else would you stoop to in order to cling to power?

Yesterday morning I was considering resigning as a News Limited columnist.

I thought this company that I love, that I have long admired for its defence of free speech, had caved in to pressure from a Prime Minister to close down reporting of a matter of public interest.

That matter was Gillard’s former relationship, professional and romantic, with union official Bruce Wilson who, unknown to her, was ripping off employers and members of the Australian Workers Union, of which he was state secretary.

I was under instructions not to comment on this myself, after I wrote about it on my blog on Saturday, until further legal advice was received.

Posts from my blog were pulled on Monday, although I believe they were fair, accurate and in the public interest.

Worse, The Australian newspaper, also part of News Limited, on Monday removed from its website a column by Glenn Milne - also referring to Gillard’s past relationship - that had appeared in the morning paper.

In its place, the paper ran an apology for Milne’s “assertions about the conduct of the Prime Minister” and said they were “untrue”. Nor did this silencing of debate affect only News Limited. Presenter Michael Smith, of Sydney’s 2UE, owned by Fairfax Media, was also silenced.

Smith had received a statutory declaration from Bob Kernohan, a former AWU state president, detailing Wilson’s frauds from 1992 to 1995.

But again questions are raised about Gillard’s judgment in having had this relationship, and Smith last weekend pre-recorded a half-hour interview to explore them. He had lawyers clear it to avoid any risk of defamation.

But on Monday, while Smith was on air, his radio station cancelled the interview. It banned him from running it on Tuesday, too.

Here’s how all this came about. Smith on Friday aired some of Kernohan’s statutory declaration, and I then published extracts on my blog, predicting what Kernohan would say to Smith on air on Monday.

As I made clear, the issue was not that Gillard had done anything improper.

There is no evidence of that.

The issue was her judgment in having a professional and romantic relationship with a man now exposed as a conman - and whether Gillard could afford scrutiny like this when she was already hopelessly tangled in defending backbencher Craig Thomson from allegations that, while he was the Health Services Union’s secretary, his union credit card was used to withdraw $100,000 and pay for prostitutes.

Gillard’s office hit the panic button. Gillard herself rang Hartigan on Saturday to check whether I or another News Limited journalist would be pursuing the story.

The latest Newspoll reveals Victorian Labor’s primary vote has dived more than eight points since the state election last November, delivering the Coalition a landslide lead just nine months after last year’s knife-edge poll.

The last time a Labor government was this unpopular in Victoria was when Joan Kirner’s ill-fated administration was in its death throes.

Newspoll shows Victorian Premier Ted Baillieu’s Coalition has a 57-43 per cent two-party-preferred lead, which would cost Labor close to 20 seats if a state election were held today....

The Newspoll will also spark debate about whether the troubled Gillard government is now poisoning the state vote in Victoria.

First, it’s more evidence that the Labor brand generally is in deep trouble.

Second, it shows that in Victoria, at least, less politics is more.

Third, there is indeed a poisoning of Labor’s state vote by the toxic Gillard Government.

Lastly, if federal Labor is losing it even in Gillard’s home state… well, recovery will be a decade away. A leadership change and a radical renewal is becoming urgent.

Adding to that urgency is increasing evidence that independent MP Andrew Wilkie will indeed make good his threat to vote down the Government by May if it does not deliver (and it won’t and can’t) on its promise of a mandatory cap on pokies losses. That denies Gillard its last, false hope that if voters got enough time to see that the carbon dioxide tax isn’t so bad, they’d forgive the government.

Andrew Bolt – Wednesday, August 31, 11 (05:10 am)

OUR grievance industry is so short of customers in this tolerant land that it’s going way out of its way to invent injustice and take offence.

Take this week’s example.

Two white men declare a black man, Wallabies rugby star Radike Samo, is their hero and find themselves denounced as racists for their tribute.

Such is this farce that even Qantas is forced to grovel, although not even Samo felt offended.

First, some history.

Once a stereotypical racist was the kind of person who’d see a black man and think him not fully human.

But that kind of racist is thankfully hard to find these days, which leaves a whole industry of offence-takers, professional straiteners and race experts twiddling their thumbs, worrying where their next grant will come from.

In 2001, for instance, Equal Opportunity Commission Victoria’s chairman admitted: “I am not aware of any conclusive evidence that suggests that discrimination is increasing.”

But instead of celebrating a good job well done, the EOCV decided it needed to find more customers.

Andrew Bolt – Wednesday, August 31, 11 (04:36 am)

JULIA Gillard faces a possible caucus revolt over her refusal to hold an inquiry into the future of manufacturing. ..

Ms Gillard, who yesterday met workers about to lose their steel industry jobs in Wollongong, south of Sydney, rejected any need for an inquiry, saying it would delay action to help people who had lost their jobs…

The leaders of two manufacturing unions and the Australian Industry Group, who met Ms Gillard to discuss their fears on Monday, said the Prime Minister had left open the idea of establishing a formal inquiry to consider an industry support plan.

Yesterday, Ms Gillard, who had previously rejected any retreat to protectionism, said there would be no inquiry, sparking an angry response from Labor MPs.

Senator Doug Cameron said the decision was arrogant and “politically dumb”.

He told The Australian he would ask the next caucus meeting, to be held in two weeks, to defy the Prime Minister by backing an inquiry. “I just think it’s premature to be saying there should be no inquiry. It’s economically irresponsible not to take a close look at the manufacturing industry,” he said.

“I will move at the next caucus that we should have an inquiry."…

Labor MP Stephen Jones, whose south coast seat of Throsby is bearing the brunt of the NSW job losses and who leads a group of 25 MPs sympathetic to the manufacturing industry, said he would back an inquiry.

Andrew Bolt – Wednesday, August 31, 11 (04:27 am)

When people like Peter Costello now say “responsible adult”, they mean Simon Crean:

We should be encouraging more flexible and productive work arrangements. We should be trying to lower costs for business - costs like electricity - not increasing them. For the first time that I can remember, an Australian government is introducing a policy - the carbon tax - which is consciously designed to cut national income rather than boost it.

A confidential cable sent by then US ambassador Robert McCallum to authorities in Washington in 2008 identifies the Victorian factional allies as potential thwarters of the rising political fortunes of the Prime Minister - then deputy prime minister.

The cable, published yesterday by WikiLeaks, also identifies “socially conservative” veteran union heavyweights - Shop Distributive and Allied Employees Association national secretary Joe De Bruyn and Australian Workers Union national president Bill Ludwig - as being potential obstacles to Ms Gillard assuming the Labor leadership.

“So could the head of the Victorian Right, Senator Stephen Conroy (who was a strong supporter of Kim Beazley and cannot stand Gillard), and the ambitious MP and former unionist Bill Shorten (also a strong supporter of Beazley who has prime ministerial ambitions),” it continues.

Andrew Bolt – Wednesday, August 31, 11 (12:14 am)

By some entirely above-board good fortune, businessman Michael Williamson sells his IT equipment to the Helath Services Union, whose president is Michael Williamson, the senor vice president of the Labor party and mentor of Craig “credit card” Thomson:

Mr Williamson is also credited with using his ‘’entrepreneurial skills’’ to bring new services for union members, the ALP website claims.

Mr Williamson is also a director of Imaging Partners Online, which provides off-site radiology services to both private and public hospitals. Last year Mr Williamson spent $522,000 buying a beach house at Lake Macquarie, having previously spent $470,000 buying the adjacent block.

The well-connected Mr Williamson is a former president of the Labor Party and is vice-president of the party. His daughter, Alex, is a media adviser in the Prime Minister Julia Gillard’s staff. Mr Williamson did not return the Herald’s call.

Williamson’s conflict of interest is properly noted and audited and officially approved. Producers from my TV show have tried to interview him, but no luck. I wonder how much rent his private company pays to his union for sharing the office space.

UPDATE

Meanwhile…

The aftershocks of the Thomson affair are continuing to reverberate inside the government, with intra-factional tensions in Victoria at boiling point.

Senator Feeney, in a dangerous position on the senate ticket, is likely to seek preselection for a lower house seat. The Right in Victoria is split and relationships between the main powerbrokers are fraught. Senator Feeney is aligned with the HSU; the other group is led by Bill Shorten and Stephen Conroy.

There is, of course, not the slightest suggestion that Shorten and Conroy would condone such behaviour, and both have reportedly sent a message to hotheads to “cool it”. I’m not sure they can put a lid on the fury, though.

The AEC confirmed yesterday it had sent the NSW branch of the Health Services Union, also known as HSUEast, a “please explain” letter concerning its 2009-10 declaration as an “associated entity”, or affiliated union, of the Labor Party.

As an associated entity, the union is required to declare annually the total amount it has spent.

The Australian understands the AEC also has concerns about the accuracy of political-expenditure declarations lodged by the union’s national branch, which is not affiliated with the Labor Party, and has written to HSU national secretary Kathy Jackson.

The HSUEast declaration, lodged last October, listed total outflows as $22,225. The equivalent amount declared in 2008-09 was more than $31 million.

On Monday the HSU submitted an amended return to the AEC, giving the 2009-10 figure as $16,284,546. The amendment was lodged while the union was fielding inquiries from The Australian on its financial links to Labor, including an undeclared $79,000 discount on rent paid by the party as a tenant of HSUEast in Sydney.

August 31st Bible Readings

A years plan to read the bible. Each day new text will be read and by the end of the year both the new and old testament will be completed. Some images free sourced from Cathy Ngo and Videoblocks.com. Accidental mistakes will occur Psalm 129-131...

Obama is not a friend of any if he promotes tolerance of drugs in Mexico.

American politicians are too quick to criticize Mexico, neglecting the fact that it is our most important ally in the drug war and that its government and people are carrying more than their fair share of the burden piled high by U.S. drug abuse.

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Hannah was hoping for change. Obama promised much and delivered nothing.

Aprille Lim Test Showreel Music: Ministry of sound and Train **note** More footage to be added- so final product will be cut shorter with more stuff =) Credits: - Django (Film) - Film Industry Awards opening - The People Upstairs (Fi...

Meanwhile in Sydney a magistrate lets them drive taxis.

A new investigation by the Chicago Tribune reveals that the state of Illinois subsidized a $750 million a year childcare assistance program that let violent felons, including convicted rapists and child molesters, babysit children for low-income families. State Senator Matt Murphy joined Fox and Fri...

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The administration was very effective. There were lots of people with unique viewpoints and they can argue for them cogently. Sadly Obama is not the equal of any of them, and has no one on his side who is too.

People at college are more independent. Well, the students tend to be.

College may seem like a relative bargain to some families after they see a new study by the National Association of Child Care Resource & Referral Agencies (NACCRRA) that says early child care can cost more.

===

Obama is all image and no policy

Top spokesmen for the Obama administration on Tuesday defended the White House’s issuance of “talking points” designed to shape how federal officials in this country and American diplomats serving abroad frame the upcoming 10th anniversary of the Sept. 11 terror attacks.

I want both cookies now

A decades-long study is showing kids who are impulsive and can't delay gratification at age 4 are more likely than those who can wait to have a higher risk of substance abuse, a higher body mass index and lower SAT scores, scientists say

ICU won't make you younger

A LEADING intensive-care specialist has warned that too many terminally ill people are dying painful, traumatic deaths in hospital, hooked up to machines and prodded by doctors, when most want to die ...

Why does Kelly have to fight to keep an election promise? Whom is he sticking now?

I have done nothing wrong, but I have stood up for a child that died from apparent school neglect. I appropriately reported this and so have not been able to work as a high school Math teacher in four years .. or any other job. I raised this issue publicly with Gillard and was ignored, although it impinged on her IR policy claims. Can you help me get this story told before I lose my last possession?

David Daniel BallThe brief is; I told the school of the child's allergy to peanuts a year before their neglect killed him. The fired me illegally. When the child died the Department threatened me, then had me investigated to see if I was too fat to teach Mathematics. They phoned me to inform me I was a pest and they would ignore me. The premier of NSW apparently parachuted a bureaucrat into a mid level public service position to abuse me. I was ordered to delete my private blogs numbering 2.5 million words and images. I approached the Minister of Education to address the issue and they threatened me. I resigned to speak out and the harassment extended so I could not get casual work. Media were apparently ordered to back off. I believe the abuse is related to an earlier bungled pedophile investigation in which I correctly informed on a teacher, but the ALP would have been embarrassed and it was inconvenient to discuss it.

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About Me

I'm author of History in a Year by the Conservative Voice aka History of the World in a Year by the Conservative Voice.

I'm the Conservative Voice.

I'm looking to make contact with those who might use my skill.

I have an m-audio mobile pre amp fed by the audiotechnica 2041sp condensor mic pack. Prior to 15/4/06, I'd used a Shure sm-58 that required a nuclear blast to register a sound or the internal mic of my aged imac, which has a penchance to recording my breathing. I also used a Griffin itrip, until the community convinced me it was not hiding my talent as well as the other mics.

I am a Writer and an occasional Math Teacher (Sir, what's the occasion?). I like to sing, having no instrumental talent (cannot even clap in time, and yes, I'm aware singing badly IS obnoxious).

I have performed the finale to Les Miserables before an audience of 500. I have also sung before a similar audience (students, parents) renditions of 'I Will' (Beatles), 'Mr Cairo' (Jon Vangelis) and 'I am Australian' (Seekers). Now I seek another profession because the audience hates me ..